Power, People, Planet
For Sub-Saharan Africa, 2015 is a turning point. The summits on sustainable development, financing and climate change are swinging the spotlight not only onto Africa’s needs to accelerate development and adapt to global warming, but also onto the region’s urgent energy crisis. Two in three Africans lack access to electricity.
But this crisis is also a moment of great opportunity, as we demonstrate in the Africa Progress Report 2015, Power People Planet: Seizing Africa’s Energy and Climate Opportunities. Demand for modern energy is set to surge, fuelled by economic growth, demographic change and urbanisation. As the costs of low-carbon energy fall, Africa could leapfrog into a new era of power generation. Utility reform, new technologies and new business models could be as transformative in energy as the mobile phone has been in telecommunications.
Renewable energy is at the forefront of the changes sweeping Africa, which is registering some of the most remarkable advances in solar, geothermal and wind power. With world leaders due to meet in Paris in December to settle on a new global climate change deal, Africa has a chance to show the way to a low-carbon future – while putting in place the policies needed to reduce its vulnerability to the effects of climate change.
A “triple win” is within the region’s grasp, as renewable technologies create opportunities to increase agricultural productivity, improve resilience to climate change, and contribute to long-term reductions in dangerous carbon emissions.
The Africa Progress Report 2015 explains the bold steps that leaders globally and in Africa must take to achieve this vision. Above all, the report shows that the global climate moment is also Africa’s moment – Africa’s moment to lead the world.
Affordable and reliable electricity underpins every aspect of social and economic life. But Sub-Saharan Africa has an energy crisis that demands urgent political attention. Two in every three Africans, around 621 million in total, have no access to electricity at all.
The consequences of energy deficits have yet to register with sufficient force on the policy agendas of Africa governments. The same is true of the wider international community. Without universal access to energy services of adequate quality and quantity, countries cannot sustain dynamic growth, build more inclusive societies and accelerate progress towards eradicating poverty. When health systems are unable to provide preventive and curative services, people who are already vulnerable face heightened risks. And when shortages of electricity hamper schooling, children lose a chance to escape poverty and build secure livelihoods.
Viewed from an investment perspective, replacing existing fuels with modern energy represents a widely neglected market opportunity. Access to modern energy systems could cut household costs, with benefits for expenditure and investment in other areas. Just halving costs would save US$5 billion for people living below US$2.50, or US$36 per household. Plausible price reductions of 80 per cent would raise these figures to US$8 billion overall, US$58 per household. How big is the investment gap that has to be closed if Africa is to transform its energy system? We estimate it at US$55 billion a year.
OPPORTUNITY AFRICA – THE REGION’S VAST UNTAPPED ENERGY POTENTIAL
Africa’s energy systems stand at a crossroads. For countries across the region, this is a moment of great opportunity. Two-thirds of the energy infrastructure that should be in place by 2030 has yet to be built. Demand for energy is set to surge, fuelled by economic growth, demographic change and urbanization. As innovation drives down costs for low-carbon energy, Africa could seize the opportunity to leapfrog into a new era of power generation.
But such positive outcomes are not guaranteed. Energy planning in Africa has suffered from a backward-looking conservatism that could leave the region on the sidelines of the global low-carbon energy revolution. Perpetuating the limited and unequal access to small amounts of power that characterizes much of Africa today is a prescription for inequality and restricted opportunity.
There are two fundamental requirements for changing this picture. First, the quantity of power generation has to undergo a step increase. Second, far more attention has to be paid to the most disadvantaged. Devolved power generation, coupled with more flexible approaches to grid development, could bring electricity to every household in Africa. However, success will require strong political leadership to overhaul the governance of power utilities.
AFRICA’S ENERGY TRANSFORMATION – THE RISING TIDE OF REFORM, INVESTMENT AND INNOVATION
After decades of neglect, energy policy is starting to move centre-stage in Africa. Governments are adopting more ambitious targets for power generation, backed in some cases by far-reaching reforms of their energy sectors. Part of the impetus towards change can be traced to financing. Several governments have stepped up public spending commitments. Energy-sector reforms have unleashed a new wave of private investment. Development finance institutions are playing an expanded role, and international cooperation has moved into a higher gear.
Renewable energy is at the forefront of the changes sweeping Africa. Many governments have recognized the potential benefits of non-hydro renewable energy. The region is registering some of the most remarkable advances in solar, geothermal and wind power.
African governments increasingly recognize the benefits of developing larger regional markets. Established power pools are deepening and the rise of potential exporters has given new impetus to the development of regional grids.
Utility reform, new technologies and new business models could be as transformative in energy as the mobile phone was in telecommunications. Yet energy plans in many African countries adhere to increasingly anachronistic, centralized, grid-based energy models – and do not envisage universal access by 2030.
Insufficient attention has been paid to one of Africa’s greatest energy challenges: the use of biofuels by households. Increasing demand for clean, efficient cooking-stoves would save lives, liberate millions of women and girls from the drudgery of collecting firewood and generate wide-ranging environmental benefits. Evidence from several countries demonstrates that accelerated change is possible.
AFRICA’S STAKE IN THE GLOBAL DEAL
Sub-Saharan Africa has a great deal at stake in international cooperation on climate. Impressive human development gains are taking place, but acute climate risks could reverse these in the second half of the 21st century. Africa is one of the regions most vulnerable to climate change because of its dependence of agriculture rainfall, its high levels of background poverty and the combined impact of higher food prices and lower yields.
Viewed from the other end of the telescope, Africa is part of the climate opportunity. Climate change has given an added urgency to policies that should be introduced irrespective of the climate threat. African governments should be doing far more to develop the resilient agricultural systems needed to manage climate risk, raise productivity and strengthen food security.
This backdrop has important implications for how African governments approach the climate negotiations. Given that land use dominates the region’s greenhouse gas emissions, there is a concern that activities aimed at reducing or mitigating emissions might hurt rural populations. Similarly, with power generation producing modest greenhouse gas emissions, there is a view that Africa has much to lose from any commitments to mitigate while the world has little to gain.
These are misperceptions. In agriculture and land use, triple wins are available for agricultural productivity, climate resilience and climate mitigation. In power generation, too, there are triple-win scenarios. Renewable technologies can create opportunities for increased productivity, greater resilience and long-term carbon mitigation.
INTERNATIONAL ACTION – PRIORITIES FOR PARIS
For Sub-Saharan Africa, the Paris summit in late 2015 represents a fork in the road. Failure to agree on an ambitious and practical agenda for action will greatly increase the likelihood of reversals in human development. The consequences will be measured in lost opportunities for Africa and the rest of the world to sustain growth and reduce poverty.
The Paris summit also provides governments in Africa with an opportunity to demonstrate climate leadership. They can play an important role in articulating how the principle of “equitable access to sustainable development” can advance the cause of climate justice, steering negotiations away from the sterile deadlock over “common but differentiated responsibilities”.
International cooperation and climate finance have a vital role to play. The choices open to African governments are constrained by financing gaps. More effective cooperation would enable Africa to seize the opportunities offered by renewable energy, conservation and agricultural productivity, benefiting the region and the world.
The Paris summit outcome will be dictated by politics and by political leadership. There are encouraging signs of a renewed momentum, but there is a large gap between the policy statements and actions of many governments and businesses. Energy companies based on fossil fuels use their political heft to skew public policies in a direction that is damaging for climate change. Effective action against climate change demands that governments push carbon out of markets through taxation, quotas and regulatory measures. Instead, they are subsidizing the discovery and use of carbon-intensive fuels.
SECURING A BETTER DEAL FOR AFRICA
What would a good deal for Africa look like at the Paris climate summit? International action to get on a trajectory to zero emissions consistent with the 2˚C threshold is an imperative. The Paris summit also presents Africa and the world with an opportunity to build a bridge from climate action to sustainable development. The world stands to gain from Africa accelerating progress towards a low-carbon transition and different approaches to land use, and Africa needs international support to scale up current initiatives.
The intended nationally determined contributions (INDCs) provide African governments with a vehicle to set out their ambition for the transition to a growth-oriented, climate-resilient, low-carbon development model. The submissions could go beyond outlining what countries are doing now to identifying what could be done through deeper international cooperation on financing, technology and capacity development.
The INDCs should also include Africa-wide prescriptions for reform of the climate finance architecture. Sub-Saharan Africa has been poorly served by climate finance. Modest funding has been transferred through fragmented, overly bureaucratic delivery structures that combine high transaction costs with low impact. The overwhelming bulk of finance has been earmarked for small-scale projects rather than national programmes.
International support for mitigation through agriculture, forestry and land-use changes has been limited. This is unfortunate because it is precisely this area in which Sub-Saharan Africa can make the greatest contribution to global emission-reduction goals.
THE ROAD AHEAD AND RECOMMENDATIONS
In energy policy and in climate policy, there are tough choices to be made. Responsibility for those choices starts and ends with governments in Africa. Yet what is possible in Africa will also be determined in part by international action – or inaction.
AFRICAN LEADERS SHOULD:
1. Demonstrate greater leadership and ambition in energy and climate
• Ensure universal access to energy by 2030
• Finance the ambition
• Deepen regional cooperation to create an integrated African grid
• Power up Africa’s agriculture sector
• Use national climate plans to chart desired energy transition
• Put the African climate vision into action
2. Drive innovation and deliver
• Seize the opportunity to “leapfrog” to renewable-friendly regulations
• Adopt new models of planned urbanization
3. Pull the plug on waste and corruption
• Redirect the US$21 billion spent annually on subsidies
• Increase the transparency of energy utilities
• End tax evasion and stem illicit revenue flows
THE INTERNATIONAL COMMUNITY SHOULD:
1. Demonstrate leadership on reducing emissions
• Raise the level of ambition at the Paris Climate Summit
• Align policies with commitments and phase out fossil-fuel subsidies
2. Deliver the finance
• Overhaul the climate-finance architecture
• Seize the Addis opportunity
• Unlock private finance
• Boost the energy focus of multilateral institutions
• Rethink adaptation
3. Act collectively to combat global corruption and advance transparency
• Advance transparency in energy
• Redouble efforts to combat tax evasion
PRIVATE INVESTORS AND MULTINATIONAL COMPANIES SHOULD:
1. Demand an ambitious Paris climate agreement
2. Play a leadership role in the global transparency movement
3. Review risk assessments and invest responsibly in Africa